NEW YORK, Oct. 24, 2019 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the third quarter of 2019 of $81.9 million, or $0.24 per diluted common share, as compared to the third quarter of 2018 earnings of $69.6 million, or $0.20 per diluted common share, and net income of $76.5 million, or $0.22 per diluted common share, for the second quarter of 2019. Excluding all non-core charges, our adjusted net income was $83.1 million, or $0.24 per diluted common share, for the third quarter of 2019, $73.1 million, or $0.21 per diluted common share, for the third quarter of 2018, and $78.8 million, or $0.23 per diluted common share, for the second quarter of 2019. See further details below, including a reconciliation of our adjusted net income (a non-GAAP measure) in the "Consolidated Financial Highlights" tables.
Key financial highlights for the third quarter:
- Loan Portfolio: Loans increased $765.0 million, or 11.9 percent on an annualized basis, to approximately $26.6 billion at September 30, 2019 from June 30, 2019. The increase was largely due to strong organic loan growth within the commercial real estate, commercial and industrial and automobile loan categories. Additionally, we sold approximately $220 million of residential mortgage loans resulting in total pre-tax gains of $5.2 million in the third quarter of 2019.
- Net Interest Income and Margin: Net interest income on a tax equivalent basis of $221.7 million for the third quarter of 2019 increased $355 thousand as compared to the second quarter of 2019. Our net interest margin on a tax equivalent basis of 2.91 percent for the third quarter of 2019 decreased by 5 basis points from 2.96 percent for the second quarter of 2019. See the "Net Interest Income and Margin" section below for more details.
- Provision for Credit Losses: The provision for credit losses increased $6.6 million to $8.7 million for the third quarter of 2019 as compared to $2.1 million for the second quarter of 2019 due, in part, to additional reserves on impaired taxi medallion loans and strong loan growth in the third quarter.
- Credit Quality: Net loan charge-offs totaled $2.0 million for the third quarter of 2019 as compared to $3.0 million for the second quarter of 2019. Non-accrual loans represented 0.38 percent and 0.37 percent of total loans at September 30, 2019 and June 30, 2019, respectively.
- Non-interest Income: Non-interest income increased $13.5 million to $41.2 million for the third quarter of 2019 as compared to the second quarter of 2019 mainly due to increases of $8.5 million and $1.3 million in swap fee income from commercial loan customer transactions and net gains on the sale of residential mortgage loans, respectively. Additionally, there were no net impairment losses on investment securities recognized during the third quarter of 2019 as compared to $2.9 million for the second quarter of 2019.
- Non-interest Expense: Non-interest expense increased $4.1 million to $145.9 million for the third quarter of 2019 as compared to the second quarter of 2019. Professional and legal fees increased $1.7 million to $5.9 million for the third quarter of 2019 largely due to $1.4 million of merger expenses related to the pending acquisition of Oritani Financial Corp. Other expense increased $1.3 million from the second quarter of 2019 partly due to a $1.3 million increase in net losses on other real estate owned. Additionally, salary and employee benefits expense increased by $1.1 million, or 1.4 percent, in the third quarter of 2019 as compared to the second quarter of 2019 partly due to an increase in the cash incentive compensation accruals and seasonal internship program expense.
- Efficiency Ratio: Our efficiency ratio was 55.73 percent for the third quarter of 2019 as compared to 57.19 percent and 61.70 percent for the second quarter of 2019 and third quarter of 2018, respectively. Our adjusted efficiency ratio was 53.48 percent for the third quarter of 2019 as compared to 54.57 percent and 57.84 percent for the second quarter of 2019 and third quarter of 2018, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
- Income Tax Expense: The effective tax rate was 23.6 percent for the third quarter of 2019 as compared to 26.5 percent for the second quarter of 2019. For the fourth quarter of 2019, we currently estimate that our effective tax rate will range from 24 percent to 26 percent.
- Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 0.98 percent, 9.26 percent, and 13.75 percent for the third quarter of 2019, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, was 1.00 percent, 9.40 percent, and 13.96 percent for the third quarter of 2019, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
The acquisition of Oritani Financial Corp. ("Oritani") and its principal subsidiary, Oritani Bank, is expected to close in the fourth quarter of 2019. Valley has received regulatory approval from The Office of the Comptroller of Currency to complete the merger. The merger is still subject to regulatory action by the Board of Governors of the Federal Reserve System among other conditions, including the approval by the shareholders of both Valley and Oritani at their respective special meetings to be held on November 14, 2019.
Ira Robbins, CEO and President commented, "We are pleased with our third quarter core earnings highlighted by solid non-interest income and steady improvement in our operating efficiency. During the quarter, loan growth was 11.9 percent on an annualized basis and was largely fueled by strong commercial loan demand. While the margin experienced compression as compared to the second quarter of 2019, we believe our balance sheet is well positioned to perform in the current rate environment. Additionally, our management and employees continue to work diligently on planning and integration matters related to the Oritani acquisition and we are very excited about the strength that it will add to our franchise."
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $221.7 million for the third quarter of 2019 increased $3.6 million as compared to the third quarter of 2018 and increased $355 thousand as compared to the second quarter of 2019. The increase as compared to the second quarter of 2019 was largely due to higher average loan balances and lower costs of interest-bearing liabilities, partly offset by lower yielding loans. Interest income on a tax equivalent basis increased $1.5 million to $330.4 million for the third quarter of 2019 as compared to the second quarter of 2019 mainly due to a $584.3 million increase in average loans. Interest expense of $108.6 million for the third quarter of 2019 increased $1.1 million as compared to the second quarter of 2019 largely due to higher average balances for long-term borrowings and time deposits, partially offset by the overall lower cost of funds.
Our net interest margin on a tax equivalent basis of 2.91 percent for the third quarter of 2019 decreased by 21 basis points and 5 basis points from 3.12 percent and 2.96 percent for the third quarter of 2018 and second quarter of 2019, respectively. The yield on average interest earning assets decreased by 7 basis points on a linked quarter basis mostly due to a decrease in the yield on loans. The yield on average loans decreased by 8 basis points to 4.57 percent for the third quarter of 2019 as compared to the second quarter of 2019 partly due to repayment of higher yielding loans and a decline in accretable yield on PCI loans in the third quarter of 2019. The overall cost of average interest bearing liabilities decreased 3 basis points to 1.90 percent for the third quarter of 2019 as compared to the linked second quarter of 2019 due to lower interest rates on certain deposits and borrowings repricing during the third quarter. Our cost of total average deposits was 1.27 percent for the third quarter of 2019 and remained unchanged as compared to the second quarter of 2019.
Loans, Deposits and Other Borrowings
Loans. Loans increased $765.0 million to approximately $26.6 billion at September 30, 2019 from June 30, 2019. The increase was mainly due to continued strong quarter over quarter organic growth in commercial real estate and commercial and industrial loans, as well as stronger automobile loan volumes during the third quarter of 2019. During the third quarter of 2019, we originated $138 million of residential mortgage loans for sale rather than held for investment and sold approximately $87 million of pre-existing loans from our residential mortgage loan portfolio. Residential mortgage loans held for sale totaled $41.6 million and $36.6 million at September 30, 2019 and June 30, 2019, respectively.
Deposits. Total deposits increased $772.2 million to approximately $25.5 billion at September 30, 2019 from June 30, 2019 largely due to a $534.0 million increase in time deposits. Savings, NOW and money market deposits and non-interest bearing deposits also increased by $186.7 million and $51.5 million at September 30, 2019 from June 30, 2019, respectively. Time deposits primarily increased due to the greater use of short-term brokered certificates of deposit with interest rates comparable or favorable to similar duration wholesale borrowings available from other funding sources, such as the FHLB, in the third quarter of 2019. Total brokered deposits (consisting of both time and money market deposit accounts) were $3.7 billion at September 30, 2019 as compared to $3.2 billion at June 30, 2019. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 25 percent, 44 percent and 31 percent of total deposits as of September 30, 2019, respectively.
Other Borrowings. Short-term borrowings decreased $562.4 million at September 30, 2019 as compared to June 30, 2019 largely due to the maturity and repayment of $695 million of FHLB borrowings that were mostly funded by a mix of new brokered time deposits, long-term FHLB borrowings and long-term institutional repos. As a result, long-term borrowings increased $450.5 million to $2.3 billion at September 30, 2019 as compared to June 30, 2019.
Credit Quality
Non-Performing Assets. Our past due loans and non-accrual loans discussed further below exclude PCI loans. Under U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are not subject to delinquency classification in the same manner as loans originated by Valley. Our PCI loan portfolio totaled $3.5 billion, or 13.3 percent, of our total loan portfolio at September 30, 2019.
Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities increased $4.0 million to $110.7 million at September 30, 2019 as compared to June 30, 2019 mainly due to an increase of $4.5 million in non-accrual loans during the third quarter of 2019. Non-accrual loans increased due, in part, to a $3.9 million commercial real estate loan at September 30, 2019 previously reported in loans past due 30 to 59 days at June 30, 2019. The $3.9 million non-accrual loan had no related reserves within the allowance for loan losses based upon the adequacy of the collateral valuation at September 30, 2019. Non-accrual loans represented 0.38 percent of total loans at September 30, 2019 as compared to 0.37 percent at June 30, 2019.
Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $21.4 million to $88.5 million, or 0.33 percent of total loans, at September 30, 2019 as compared to $67.0 million, or 0.26 percent of total loans, at June 30, 2019. The higher level of accruing past due loans at September 30, 2019 was largely caused by a few large matured performing commercial real estate and construction loans in the normal process of renewal. These matured performing loans totaled $22.2 million, $7.1 million, and $1.1 million within loans past due 30 - 59 days, loans past due 60 - 89 days and loans past due 90 days or more and still accruing interest at September 30, 2019, respectively. While we are required to report these matured performing loans as accruing past due loans, we believe the loans are well-secured, in the process of collection and do not represent a material negative trend in our credit quality at September 30, 2019.
During the third quarter of 2019, we continued to closely monitor our New York City and Chicago taxi medallion loans totaling $111.8 million and $7.6 million, respectively, within the commercial and industrial loan portfolio at September 30, 2019. While most of the taxi medallion loans are currently performing, negative trends in market valuations of the underlying taxi medallion collateral could impact the future performance and internal classification of this portfolio. At September 30, 2019, the taxi medallion portfolio included impaired loans totaling $91.1 million with related reserves of $34.2 million within the allowance for loan losses as compared to impaired loans totaling $78.3 million with related reserves of $29.5 million at June 30, 2019. The increase in both impaired taxi medallion loans and related reserves as compared to June 30, 2019 was largely due to the previously disclosed $13.7 million of performing non-impaired taxi medallion loans which matured in June 2019 that were subsequently restructured and classified as performing troubled debt restructured (TDR) loans in the third quarter of 2019. At September 30, 2019, the impaired taxi medallion loans largely consisted of $67.1 million of non-accrual loans and $24.0 million of performing troubled debt restructured (TDR) loans classified as substandard loans.
Allowance for Credit Losses. The following table summarizes the allocation of the allowance for credit losses to specific loan categories and the allocation as a percentage of each loan category (including PCI loans) at September 30, 2019, June 30, 2019, and September 30, 2018:
| September 30, 2019 | June 30, 2019 | September 30, 2018 | |||||||||||||||||||
| Allocation | Allocation | Allocation | |||||||||||||||||||
| as a % of | as a % of | as a % of | |||||||||||||||||||
| Allowance | Loan | Allowance | Loan | Allowance | Loan | ||||||||||||||||
| Allocation | Category | Allocation | Category | Allocation | Category | ||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||
| Loan Category: | |||||||||||||||||||||
| Commercial and industrial loans* | $ | 103,919 | 2.21 | % | $ | 97,358 | 2.11 | % | $ | 88,509 | 2.20 | % | |||||||||
| Commercial real estate loans: | |||||||||||||||||||||
| Commercial real estate | 23,044 | 0.17 | % | 23,796 | 0.19 | % | 29,093 | 0.24 | % | ||||||||||||
| Construction | 25,727 | 1.67 | % | 25,182 | 1.65 | % | 21,037 | 1.49 | % | ||||||||||||
| Total commercial real estate loans | 48,771 | 0.33 | % | 48,978 | 0.34 | % | 50,130 | 0.37 | % | ||||||||||||
| Residential mortgage loans | 5,302 | 0.13 | % | 5,219 | 0.13 | % | 4,919 | 0.13 | % | ||||||||||||
| Consumer loans: | |||||||||||||||||||||
| Home equity | 487 | 0.10 | % | 505 | 0.10 | % | 576 | 0.11 | % | ||||||||||||
| Auto and other consumer | 6,291 | 0.27 | % | 6,019 | 0.26 | % | 5,341 | 0.25 | % | ||||||||||||
| Total consumer loans | 6,778 | 0.24 | % | 6,524 | 0.23 | % | 5,917 | 0.22 | % | ||||||||||||
| Total allowance for credit losses | $ | 164,770 | 0.62 | % | $ | 158,079 | 0.61 | % | $ | 149,475 | 0.62 | % | |||||||||
| Allowance for credit losses as a % | |||||||||||||||||||||
| of non-PCI loans | 0.72 | % | 0.72 | % | 0.76 | % | |||||||||||||||
| * Includes the reserve for unfunded letters of credit. | |||||||||||||||||||||
Our loan portfolio, totaling $26.6 billion at September 30, 2019, had net loan charge-offs totaling $2.0 million for the third quarter of 2019 as compared to $3.0 million and $231 thousand for the second quarter of 2019 and third quarter of 2018, respectively. There were no taxi medallion loan charge-offs during the third quarters of 2019 and 2018 as compared to $2.3 million for the second quarter of 2019.
During the third quarter of 2019, we recorded an $8.7 million provision for credit losses as compared to $2.1 million and $6.6 million for the second quarter of 2019 and the third quarter of 2018, respectively. The increase in the third quarter of 2019 provision as compared to the second quarter of 2019 was largely due to additional allocated reserves of $5.4 million related to the $13.7 million of impaired taxi medallion loans classified as TDR loans upon renewal during the third quarter of 2019.
The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a percentage of total loans was 0.62 percent, 0.61 percent and 0.62 percent at September 30, 2019, June 30, 2019 and September 30, 2018, respectively. At September 30, 2019, the allowance allocations for losses as a percentage of total loans remained relatively stable as compared to June 30, 2019 for most loan categories. However, the allocation for commercial and industrial loans increased 0.10 percent largely due to additional allocated reserves for impaired taxi medallion loans within this loan category.
Capital Adequacy
Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, Tier 1 capital, Tier 1 leverage capital, and common equity Tier 1 capital ratios were 11.03 percent, 9.30 percent, 7.61 percent and 8.49 percent, respectively, at September 30, 2019.
Investor Conference Call
Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Daylight Time, today to discuss the third quarter of 2019 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432 conference ID: 5766538. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/9ddykji8 [edge.media-server.com] and archived on Valley's website through Monday, November 25, 2019. Investor presentation materials will be made available prior to the conference call at www.valley.com.
About Valley
As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $34 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations across New Jersey, New York, Florida and Alabama, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Service Center at 800-522-4100.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
- failure to obtain shareholder or regulatory approval for the acquisition of Oritani or to satisfy other conditions to the merger on the proposed terms and within the proposed timeframe;
- the inability to realize expected cost savings and synergies from the Oritani merger in amounts or in the timeframe anticipated;
- costs or difficulties relating to Oritani integration matters might be greater than expected;
- material adverse changes in Valley’s or Oritani’s operations or earnings;
- the inability to retain customers and qualified employees of Oritani;
- the inability to repay $635 million of higher cost FHLB borrowings in conjunction with the Oritani merger;
- developments in the DC Solar bankruptcy and federal investigations that could require the recognition of additional tax provision charges related to uncertain tax liability positions;
- higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
- weakness or a decline in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in commercial real estate values within our market areas;
- the inability to grow customer deposits to keep pace with loan growth;
- an increase in our allowance for credit losses due to higher than expected loan losses within one or more segments of our loan portfolio;
- less than expected cost savings from Valley's branch transformation strategy;
- greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
- the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley's branch transformation strategy;
- cyber-attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;
- results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
- damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of violations of laws or regulations brought as class actions, breach of fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trademark infringement, employment related claims, and other matters;
- changes in accounting policies or accounting standards, including the new authoritative accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our allowance for credit losses after adoption on January 1, 2020;
- our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
- unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events;
- unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors; and
- the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.
A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2018.
We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
| Contact: | Michael D. Hagedorn |
| Senior Executive Vice President and | |
| Chief Financial Officer | |
| 973-872-4885 |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| SELECTED FINANCIAL DATA | Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| ($ in thousands, except for share data) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| FINANCIAL DATA: | |||||||||||||||||||
| Net interest income | $ | 220,625 | $ | 220,234 | $ | 216,800 | $ | 659,507 | $ | 635,150 | |||||||||
| Net interest income - FTE (1) | 221,747 | 221,392 | 218,136 | 663,064 | 639,508 | ||||||||||||||
| Non-interest income | 41,150 | 27,603 | 29,038 | 176,426 | 99,358 | ||||||||||||||
| Non-interest expense | 145,877 | 141,737 | 151,681 | 435,409 | 475,349 | ||||||||||||||
| Income tax expense | 25,307 | 27,532 | 18,046 | 110,035 | 50,191 | ||||||||||||||
| Net income | 81,891 | 76,468 | 69,559 | 271,689 | 184,326 | ||||||||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 9,516 | 9,516 | ||||||||||||||
| Net income available to common shareholders | $ | 78,719 | $ | 73,296 | $ | 66,387 | $ | 262,173 | $ | 174,810 | |||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||
| Basic | 331,797,982 | 331,748,552 | 331,486,500 | 331,716,652 | 331,180,213 | ||||||||||||||
| Diluted | 333,405,196 | 332,959,802 | 333,000,242 | 333,039,436 | 332,694,080 | ||||||||||||||
| Per common share data: | |||||||||||||||||||
| Basic earnings | $ | 0.24 | $ | 0.22 | $ | 0.20 | $ | 0.79 | $ | 0.53 | |||||||||
| Diluted earnings | 0.24 | 0.22 | 0.20 | 0.79 | 0.53 | ||||||||||||||
| Cash dividends declared | 0.11 | 0.11 | 0.11 | 0.33 | 0.33 | ||||||||||||||
| Closing stock price - high | 11.21 | 10.78 | 13.04 | 11.21 | 13.38 | ||||||||||||||
| Closing stock price - low | 10.04 | 9.75 | 11.25 | 9.00 | 11.19 | ||||||||||||||
| CORE ADJUSTED FINANCIAL DATA: (2) | |||||||||||||||||||
| Net income available to common shareholders, as adjusted | $ | 79,962 | $ | 75,614 | $ | 69,888 | $ | 227,340 | $ | 200,419 | |||||||||
| Basic earnings per share, as adjusted | 0.24 | 0.23 | 0.21 | 0.69 | 0.61 | ||||||||||||||
| Diluted earnings per share, as adjusted | 0.24 | 0.23 | 0.21 | 0.68 | 0.60 | ||||||||||||||
| FINANCIAL RATIOS: | |||||||||||||||||||
| Net interest margin | 2.89 | % | 2.95 | % | 3.10 | % | 2.93 | % | 3.10 | % | |||||||||
| Net interest margin - FTE (1) | 2.91 | 2.96 | 3.12 | 2.95 | 3.12 | ||||||||||||||
| Annualized return on average assets | 0.98 | 0.94 | 0.91 | 1.10 | 0.82 | ||||||||||||||
| Annualized return on avg. shareholders' equity | 9.26 | 8.79 | 8.41 | 10.44 | 7.46 | ||||||||||||||
| Annualized return on avg. tangible shareholders' equity (2) | 13.75 | 13.16 | 12.96 | 15.65 | 11.54 | ||||||||||||||
| Efficiency ratio (3) | 55.73 | 57.19 | 61.70 | 52.09 | 64.72 | ||||||||||||||
| CORE ADJUSTED FINANCIAL RATIOS: (2) | |||||||||||||||||||
| Annualized return on average assets, as adjusted | 1.00 | % | 0.96 | % | 0.96 | % | 0.96 | % | 0.94 | % | |||||||||
| Annualized return on average shareholders' equity, as adjusted | 9.40 | 9.05 | 8.84 | 9.10 | 8.50 | ||||||||||||||
| Annualized return on average tangible shareholders' equity, as adjusted | 13.96 | 13.56 | 13.61 | 13.65 | 13.14 | ||||||||||||||
| Efficiency ratio, as adjusted | 53.48 | 54.57 | 57.84 | 54.27 | 58.32 | ||||||||||||||
| AVERAGE BALANCE SHEET ITEMS: | |||||||||||||||||||
| Assets | $ | 33,419,137 | $ | 32,707,144 | $ | 30,493,175 | $ | 32,811,565 | $ | 29,858,764 | |||||||||
| Interest earning assets | 30,494,569 | 29,877,384 | 27,971,712 | 29,981,699 | 27,330,965 | ||||||||||||||
| Loans | 26,136,745 | 25,552,415 | 23,659,190 | 25,651,195 | 22,939,106 | ||||||||||||||
| Interest bearing liabilities | 22,858,121 | 22,328,544 | 20,758,249 | 22,512,114 | 20,196,547 | ||||||||||||||
| Deposits | 24,836,349 | 24,699,238 | 22,223,203 | 24,772,979 | 21,985,189 | ||||||||||||||
| Shareholders' equity | 3,536,528 | 3,481,519 | 3,307,690 | 3,471,432 | 3,292,439 | ||||||||||||||
| As Of | |||||||||||||||||||
| BALANCE SHEET ITEMS: | September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||
| (In thousands) | 2019 | 2019 | 2019 | 2018 | 2018 | ||||||||||||||
| Assets | $ | 33,765,539 | $ | 33,027,741 | $ | 32,476,991 | $ | 31,863,088 | $ | 30,881,948 | |||||||||
| Total loans | 26,567,159 | 25,802,162 | 25,423,118 | 25,035,469 | 24,111,290 | ||||||||||||||
| Non-PCI loans | 23,029,991 | 22,030,205 | 21,418,778 | 20,845,383 | 19,681,255 | ||||||||||||||
| Deposits | 25,546,122 | 24,773,929 | 24,907,496 | 24,452,974 | 22,588,272 | ||||||||||||||
| Shareholders' equity | 3,558,075 | 3,504,118 | 3,444,879 | 3,350,454 | 3,302,936 | ||||||||||||||
| LOANS: | |||||||||||||||||||
| (In thousands) | |||||||||||||||||||
| Commercial and industrial | $ | 4,695,608 | $ | 4,615,765 | $ | 4,504,927 | $ | 4,331,032 | $ | 4,015,280 | |||||||||
| Commercial real estate: | |||||||||||||||||||
| Commercial real estate | 13,365,454 | 12,798,017 | 12,665,425 | 12,407,275 | 12,251,231 | ||||||||||||||
| Construction | 1,537,590 | 1,528,968 | 1,454,199 | 1,488,132 | 1,416,259 | ||||||||||||||
| Total commercial real estate | 14,903,044 | 14,326,985 | 14,119,624 | 13,895,407 | 13,667,490 | ||||||||||||||
| Residential mortgage | 4,133,331 | 4,072,450 | 4,071,237 | 4,111,400 | 3,782,972 | ||||||||||||||
| Consumer: | |||||||||||||||||||
| Home equity | 489,808 | 501,646 | 513,066 | 517,089 | 521,797 | ||||||||||||||
| Automobile | 1,436,608 | 1,362,466 | 1,347,759 | 1,319,571 | 1,288,902 | ||||||||||||||
| Other consumer | 908,760 | 922,850 | 866,505 | 860,970 | 834,849 | ||||||||||||||
| Total consumer loans | 2,835,176 | 2,786,962 | 2,727,330 | 2,697,630 | 2,645,548 | ||||||||||||||
| Total loans | $ | 26,567,159 | $ | 25,802,162 | $ | 25,423,118 | $ | 25,035,469 | $ | 24,111,290 | |||||||||
| CAPITAL RATIOS: | |||||||||||||||||||
| Book value per common share | $ | 10.09 | $ | 9.93 | $ | 9.75 | $ | 9.48 | $ | 9.33 | |||||||||
| Tangible book value per common share (2) | 6.62 | 6.45 | 6.26 | 5.97 | 5.81 | ||||||||||||||
| Tangible common equity to tangible assets (2) | 6.73 | % | 6.71 | % | 6.63 | % | 6.45 | % | 6.48 | % | |||||||||
| Tier 1 leverage capital | 7.61 | 7.62 | 7.58 | 7.57 | 7.63 | ||||||||||||||
| Common equity tier 1 capital | 8.49 | 8.59 | 8.53 | 8.43 | 8.56 | ||||||||||||||
| Tier 1 risk-based capital | 9.30 | 9.43 | 9.38 | 9.30 | 9.46 | ||||||||||||||
| Total risk-based capital | 11.03 | 11.39 | 11.37 | 11.34 | 11.55 | ||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES: | September 30, | June 30, | September 30, | September 30, | |||||||||||||||
| ($ in thousands) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Beginning balance - Allowance for credit losses | $ | 158,079 | $ | 158,961 | $ | 143,154 | $ | 156,295 | $ | 124,452 | |||||||||
| Loans charged-off: | |||||||||||||||||||
| Commercial and industrial | (527 | ) | (3,073 | ) | (833 | ) | (7,882 | ) | (1,606 | ) | |||||||||
| Commercial real estate | (158 | ) | — | — | (158 | ) | (348 | ) | |||||||||||
| Residential mortgage | (111 | ) | — | — | (126 | ) | (167 | ) | |||||||||||
| Total Consumer | (2,191 | ) | (1,752 | ) | (1,150 | ) | (5,971 | ) | (3,783 | ) | |||||||||
| Total loans charged-off | (2,987 | ) | (4,825 | ) | (1,983 | ) | (14,137 | ) | (5,904 | ) | |||||||||
| Charged-off loans recovered: | |||||||||||||||||||
| Commercial and industrial | 330 | 1,195 | 1,131 | 2,008 | 4,057 | ||||||||||||||
| Commercial real estate | 28 | 22 | 12 | 71 | 396 | ||||||||||||||
| Residential mortgage | 3 | 9 | 9 | 13 | 269 | ||||||||||||||
| Total Consumer | 617 | 617 | 600 | 1,720 | 1,563 | ||||||||||||||
| Total loans recovered | 978 | 1,843 | 1,752 | 3,812 | 6,285 | ||||||||||||||
| Net (charge-offs) recoveries | (2,009 | ) | (2,982 | ) | (231 | ) | (10,325 | ) | 381 | ||||||||||
| Provision for credit losses | 8,700 | 2,100 | 6,552 | 18,800 | 24,642 | ||||||||||||||
| Ending balance - Allowance for credit losses | $ | 164,770 | $ | 158,079 | $ | 149,475 | $ | 164,770 | $ | 149,475 | |||||||||
| Components of allowance for credit losses: | |||||||||||||||||||
| Allowance for loan losses | $ | 161,853 | $ | 155,105 | $ | 144,963 | $ | 161,853 | $ | 144,963 | |||||||||
| Allowance for unfunded letters of credit | 2,917 | 2,974 | 4,512 | 2,917 | 4,512 | ||||||||||||||
| Allowance for credit losses | $ | 164,770 | $ | 158,079 | $ | 149,475 | $ | 164,770 | $ | 149,475 | |||||||||
| Components of provision for credit losses: | |||||||||||||||||||
| Provision for loan losses | $ | 8,757 | $ | 3,706 | $ | 6,432 | $ | 20,319 | $ | 23,726 | |||||||||
| Provision for unfunded letters of credit | (57 | ) | (1,606 | ) | 120 | (1,519 | ) | 916 | |||||||||||
| Provision for credit losses | $ | 8,700 | $ | 2,100 | $ | 6,552 | $ | 18,800 | $ | 24,642 | |||||||||
| Annualized ratio of total net charge-offs (recoveries) to average loans | 0.03 | % | 0.05 | % | 0.00 | % | 0.05 | % | 0.00 | % | |||||||||
| Allowance for credit losses as a % of non-PCI loans | 0.72 | 0.72 | 0.76 | 0.72 | 0.76 | ||||||||||||||
| Allowance for credit losses as a % of total loans | 0.62 | 0.61 | 0.62 | 0.62 | 0.62 | ||||||||||||||
| As of | |||||||||||||||||||
| ASSET QUALITY: (4) | September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||
| ($ in thousands) | 2019 | 2019 | 2019 | 2018 | 2018 | ||||||||||||||
| Accruing past due loans: | |||||||||||||||||||
| 30 to 59 days past due: | |||||||||||||||||||
| Commercial and industrial | $ | 5,702 | $ | 14,119 | $ | 5,120 | $ | 13,085 | $ | 9,462 | |||||||||
| Commercial real estate | 20,851 | 6,202 | 39,362 | 9,521 | 3,387 | ||||||||||||||
| Construction | 11,523 | — | 1,911 | 2,829 | 15,576 | ||||||||||||||
| Residential mortgage | 12,945 | 19,131 | 15,856 | 16,576 | 10,058 | ||||||||||||||
| Total Consumer | 13,079 | 11,932 | 6,647 | 9,740 | 7,443 | ||||||||||||||
| Total 30 to 59 days past due | 64,100 | 51,384 | 68,896 | 51,751 | 45,926 | ||||||||||||||
| 60 to 89 days past due: | |||||||||||||||||||
| Commercial and industrial | 3,158 | 4,135 | 1,756 | 3,768 | 1,431 | ||||||||||||||
| Commercial real estate | 735 | 354 | 2,156 | 530 | 2,502 | ||||||||||||||
| Construction | 7,129 | 1,342 | — | — | 36 | ||||||||||||||
| Residential mortgage | 4,417 | 3,635 | 3,635 | 2,458 | 3,270 | ||||||||||||||
| Total Consumer | 1,577 | 1,484 | 990 | 1,386 | 1,249 | ||||||||||||||
| Total 60 to 89 days past due | 17,016 | 10,950 | 8,537 | 8,142 | 8,488 | ||||||||||||||
| 90 or more days past due: | |||||||||||||||||||
| Commercial and industrial | 4,133 | 3,298 | 2,670 | 6,156 | 1,618 | ||||||||||||||
| Commercial real estate | 1,125 | — | — | 27 | 27 | ||||||||||||||
| Residential mortgage | 1,347 | 1,054 | 1,402 | 1,288 | 1,877 | ||||||||||||||
| Total Consumer | 756 | 359 | 523 | 341 | 282 | ||||||||||||||
| Total 90 or more days past due | 7,361 | 4,711 | 4,595 | 7,812 | 3,804 | ||||||||||||||
| Total accruing past due loans | $ | 88,477 | $ | 67,045 | $ | 82,028 | $ | 67,705 | $ | 58,218 | |||||||||
| Non-accrual loans: | |||||||||||||||||||
| Commercial and industrial | $ | 75,311 | $ | 76,216 | $ | 76,270 | $ | 70,096 | $ | 52,929 | |||||||||
| Commercial real estate | 9,560 | 6,231 | 2,663 | 2,372 | 7,103 | ||||||||||||||
| Construction | 356 | — | 378 | 356 | — | ||||||||||||||
| Residential mortgage | 13,772 | 12,069 | 11,921 | 12,917 | 16,083 | ||||||||||||||
| Total Consumer | 2,050 | 1,999 | 2,178 | 2,655 | 2,248 | ||||||||||||||
| Total non-accrual loans | 101,049 | 96,515 | 93,410 | 88,396 | 78,363 | ||||||||||||||
| Other real estate owned (OREO) | 6,415 | 7,161 | 7,317 | 9,491 | 9,863 | ||||||||||||||
| Other repossessed assets | 2,568 | 2,358 | 2,628 | 744 | 445 | ||||||||||||||
| Non-accrual debt securities (5) | 680 | 680 | — | — | — | ||||||||||||||
| Total non-performing assets | $ | 110,712 | $ | 106,714 | $ | 103,355 | $ | 98,631 | $ | 88,671 | |||||||||
| Performing troubled debt restructured loans | $ | 79,364 | $ | 74,385 | $ | 73,081 | $ | 77,216 | $ | 81,141 | |||||||||
| Total non-accrual loans as a % of loans | 0.38 | % | 0.37 | % | 0.37 | % | 0.35 | % | 0.33 | % | |||||||||
| Total accruing past due and non-accrual loans as a % of loans | 0.71 | % | 0.63 | % | 0.69 | % | 0.62 | % | 0.57 | % | |||||||||
| Allowance for losses on loans as a % of non-accrual loans | 160.17 | % | 160.71 | % | 165.27 | % | 171.79 | % | 184.99 | % | |||||||||
| Non-performing purchased credit-impaired loans (6) | $ | 63,822 | $ | 55,085 | $ | 56,182 | $ | 56,125 | $ | 75,422 | |||||||||
NOTES TO SELECTED FINANCIAL DATA
| (1 | ) | Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. |
| (2 | ) | This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. |
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| ($ in thousands, except for share data) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Adjusted net income available to common shareholders: | |||||||||||||||||||
| Net income, as reported | $ | 81,891 | $ | 76,468 | $ | 69,559 | $ | 271,689 | $ | 184,326 | |||||||||
| Less: Gain on sale leaseback transactions (net of tax)(a) | — | — | — | (55,707 | ) | — | |||||||||||||
| Add: Net impairment losses on securities (net of tax) | — | 2,078 | — | 2,078 | — | ||||||||||||||
| Add: Branch related asset impairment (net of tax)(b) | — | — | 1,304 | — | 1,304 | ||||||||||||||
| Add: Losses (gains) on securities transaction (net of tax) | 67 | (8 | ) | 56 | 82 | 630 | |||||||||||||
| Add: Severance expense (net of tax)(c) | — | — | — | 3,433 | — | ||||||||||||||
| Add: Tax credit investment impairment (net of tax)(d) | — | — | — | 1,757 | — | ||||||||||||||
| Add: Legal expenses (litigation reserve impact only, net of tax) | — | — | 1,206 | — | 8,726 | ||||||||||||||
| Add: Merger related expenses (net of tax)(e) | 1,043 | 25 | 935 | 1,068 | 12,949 | ||||||||||||||
| Add: Income tax expense (f) | 133 | 223 | — | 12,456 | 2,000 | ||||||||||||||
| Net income, as adjusted | $ | 83,134 | $ | 78,786 | $ | 73,060 | $ | 236,856 | $ | 209,935 | |||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 9,516 | 9,516 | ||||||||||||||
| Net income available to common shareholders, as adjusted | $ | 79,962 | $ | 75,614 | $ | 69,888 | $ | 227,340 | $ | 200,419 | |||||||||
| __________ | |||||||||||||||||||
| (a) The gain on sale leaseback transactions is included in gains on the sales of assets within other non-interest income. | |||||||||||||||||||
| (b) Branch related asset impairment is included in net losses on sale of assets within non-interest expense. | |||||||||||||||||||
| (c) Severance expense is included in salary and employee benefits expense. | |||||||||||||||||||
| (d) Impairment is included in the amortization of tax credit investments. | |||||||||||||||||||
| (e) Merger related expenses are primarily within professional and legal fees in 2019 and salary and employee benefits and other expenses in 2018. | |||||||||||||||||||
| (f) Income tax expense related to reserves for uncertain tax positions in 2019 and a USAB acquisition charge in 2018. | |||||||||||||||||||
| Adjusted per common share data: | |||||||||||||||||||
| Net income available to common shareholders, as adjusted | $ | 79,962 | $ | 75,614 | $ | 69,888 | $ | 227,340 | $ | 200,419 | |||||||||
| Average number of shares outstanding | 331,797,982 | 331,748,552 | 331,486,500 | 331,716,652 | 331,180,213 | ||||||||||||||
| Basic earnings, as adjusted | $ | 0.24 | $ | 0.23 | $ | 0.21 | $ | 0.69 | $ | 0.61 | |||||||||
| Average number of diluted shares outstanding | 333,405,196 | 332,959,802 | 333,000,242 | 333,039,436 | 332,694,080 | ||||||||||||||
| Diluted earnings, as adjusted | $ | 0.24 | $ | 0.23 | $ | 0.21 | $ | 0.68 | $ | 0.60 | |||||||||
| Adjusted annualized return on average tangible shareholders' equity: | |||||||||||||||||||
| Net income, as adjusted | $ | 83,134 | $ | 78,786 | $ | 73,060 | $ | 236,856 | $ | 209,935 | |||||||||
| Average shareholders' equity | 3,536,528 | 3,481,519 | 3,307,690 | 3,471,432 | 3,292,439 | ||||||||||||||
| Less: Average goodwill and other intangible assets | 1,154,462 | 1,156,703 | 1,161,167 | 1,157,203 | 1,162,980 | ||||||||||||||
| Average tangible shareholders' equity | $ | 2,382,066 | $ | 2,324,816 | $ | 2,146,523 | $ | 2,314,229 | $ | 2,129,459 | |||||||||
| Annualized return on average tangible shareholders' equity, as adjusted | 13.96 | % | 13.56 | % | 13.61 | % | 13.65 | % | 13.14 | % | |||||||||
| Adjusted annualized return on average assets: | |||||||||||||||||||
| Net income, as adjusted | $ | 83,134 | $ | 78,786 | $ | 73,060 | $ | 236,856 | $ | 209,935 | |||||||||
| Average assets | $ | 33,419,137 | $ | 32,707,144 | $ | 30,493,175 | $ | 32,811,565 | $ | 29,858,764 | |||||||||
| Annualized return on average assets, as adjusted | 1.00 | % | 0.96 | % | 0.96 | % | 0.96 | % | 0.94 | % | |||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| ($ in thousands) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Adjusted annualized return on average shareholders' equity: | |||||||||||||||||||
| Net income, as adjusted | $ | 83,134 | $ | 78,786 | $ | 73,060 | $ | 236,856 | $ | 209,935 | |||||||||
| Average shareholders' equity | $ | 3,536,528 | $ | 3,481,519 | $ | 3,307,690 | $ | 3,471,432 | $ | 3,292,439 | |||||||||
| Annualized return on average shareholders' equity, as adjusted | 9.40 | % | 9.05 | % | 8.84 | % | 9.10 | % | 8.50 | % | |||||||||
| Annualized return on average tangible shareholders' equity: | |||||||||||||||||||
| Net income, as reported | $ | 81,891 | $ | 76,468 | $ | 69,559 | $ | 271,689 | $ | 184,326 | |||||||||
| Average shareholders' equity | 3,536,528 | 3,481,519 | 3,307,690 | 3,471,432 | 3,292,439 | ||||||||||||||
| Less: Average goodwill and other intangible assets | 1,154,462 | 1,156,703 | 1,161,167 | 1,157,203 | 1,162,980 | ||||||||||||||
| Average tangible shareholders' equity | $ | 2,382,066 | $ | 2,324,816 | $ | 2,146,523 | $ | 2,314,229 | $ | 2,129,459 | |||||||||
| Annualized return on average tangible shareholders' equity | 13.75 | % | 13.16 | % | 12.96 | % | 15.65 | % | 11.54 | % | |||||||||
| Adjusted efficiency ratio: | |||||||||||||||||||
| Non-interest expense, as reported | $ | 145,877 | $ | 141,737 | $ | 151,681 | $ | 435,409 | $ | 475,349 | |||||||||
| Less: Severance expense (pre-tax) | — | — | — | 4,838 | — | ||||||||||||||
| Less: Legal expenses (litigation reserve impact only, pre-tax) | — | — | 1,684 | — | 12,184 | ||||||||||||||
| Less: Merger-related expenses (pre-tax) | 1,434 | 35 | 1,304 | 1,469 | 18,080 | ||||||||||||||
| Less: Amortization of tax credit investments (pre-tax) | 4,385 | 4,863 | 5,412 | 16,421 | 15,156 | ||||||||||||||
| Non-interest expense, as adjusted | $ | 140,058 | $ | 136,839 | $ | 143,281 | $ | 412,681 | $ | 429,929 | |||||||||
| Net interest income | 220,625 | 220,234 | 216,800 | 659,507 | 635,150 | ||||||||||||||
| Non-interest income, as reported | 41,150 | 27,603 | 29,038 | 176,426 | 99,358 | ||||||||||||||
| Add: Net impairment losses on securities (pre-tax) | — | 2,928 | — | 2,928 | — | ||||||||||||||
| Add: Losses (gains) on securities transactions, net (pre-tax) | 93 | (11 | ) | 79 | 114 | 880 | |||||||||||||
| Add: Branch related asset impairment (pre-tax) | — | — | 1,821 | — | 1,821 | ||||||||||||||
| Less: Gain on sale leaseback transaction (pre-tax) | — | — | — | 78,505 | — | ||||||||||||||
| Non-interest income, as adjusted | $ | 41,243 | $ | 30,520 | $ | 30,938 | $ | 100,963 | $ | 102,059 | |||||||||
| Gross operating income, as adjusted | $ | 261,868 | $ | 250,754 | $ | 247,738 | $ | 760,470 | $ | 737,209 | |||||||||
| Efficiency ratio, as adjusted | 53.48 | % | 54.57 | % | 57.84 | % | 54.27 | % | 58.32 | % | |||||||||
| As of | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| ($ in thousands, except for share data) | 2019 | 2019 | 2019 | 2018 | 2018 | ||||||||||||||
| Tangible book value per common share: | |||||||||||||||||||
| Common shares outstanding | 331,805,564 | 331,788,149 | 331,732,636 | 331,431,217 | 331,501,424 | ||||||||||||||
| Shareholders' equity | $ | 3,558,075 | $ | 3,504,118 | $ | 3,444,879 | $ | 3,350,454 | $ | 3,302,936 | |||||||||
| Less: Preferred stock | 209,691 | 209,691 | 209,691 | 209,691 | 209,691 | ||||||||||||||
| Less: Goodwill and other intangible assets | 1,152,815 | 1,155,250 | 1,158,245 | 1,161,655 | 1,166,481 | ||||||||||||||
| Tangible common shareholders' equity | $ | 2,195,569 | $ | 2,139,177 | $ | 2,076,943 | $ | 1,979,108 | $ | 1,926,764 | |||||||||
| Tangible book value per common share | $ | 6.62 | $ | 6.45 | $ | 6.26 | $ | 5.97 | $ | 5.81 | |||||||||
| Tangible common equity to tangible assets: | |||||||||||||||||||
| Tangible common shareholders' equity | $ | 2,195,569 | $ | 2,139,177 | $ | 2,076,943 | $ | 1,979,108 | $ | 1,926,764 | |||||||||
| Total assets | 33,765,539 | 33,027,741 | 32,476,991 | 31,863,088 | 30,881,948 | ||||||||||||||
| Less: Goodwill and other intangible assets | 1,152,815 | 1,155,250 | 1,158,245 | 1,161,655 | 1,166,481 | ||||||||||||||
| Tangible assets | $ | 32,612,724 | $ | 31,872,491 | $ | 31,318,746 | $ | 30,701,433 | $ | 29,715,467 | |||||||||
| Tangible common equity to tangible assets | 6.73 | % | 6.71 | % | 6.63 | % | 6.45 | % | 6.48 | % | |||||||||
| (3 | ) | The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income. |
| (4 | ) | Past due loans and non-accrual loans exclude purchased credit-impaired (PCI) loans. PCI loans are accounted for on a pool basis under U.S. GAAP and are not subject to delinquency classification in the same manner as loans originated by Valley. |
| (5 | ) | Represents an other-than-temporarily impaired municipal bond security classified as available for sale presented at its carrying value at June 30, 2019 and September 30, 2019. |
| (6 | ) | Represent PCI loans meeting Valley's definition of non-performing loan (i.e., non-accrual loans), but are not subject to such classification under U.S. GAAP because the loans are accounted for on a pooled basis and are excluded from the non-accrual loans in the table above. |
| SHAREHOLDERS RELATIONS Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valley.com. | ||
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
| September 30, | December 31, | ||||||
| 2019 | 2018 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Cash and due from banks | $ | 312,396 | $ | 251,541 | |||
| Interest bearing deposits with banks | 185,841 | 177,088 | |||||
| Investment securities: | |||||||
| Held to maturity (fair value of $2,121,203 at September 30, 2019 and $2,034,943 at December 31, 2018) | 2,093,757 | 2,068,246 | |||||
| Available for sale | 1,628,062 | 1,749,544 | |||||
| Total investment securities | 3,721,819 | 3,817,790 | |||||
| Loans held for sale, at fair value | 41,621 | 35,155 | |||||
| Loans | 26,567,159 | 25,035,469 | |||||
| Less: Allowance for loan losses | (161,853 | ) | (151,859 | ) | |||
| Net loans | 26,405,306 | 24,883,610 | |||||
| Premises and equipment, net | 309,730 | 341,630 | |||||
| Lease right of use assets | 286,960 | — | |||||
| Bank owned life insurance | 440,026 | 439,602 | |||||
| Accrued interest receivable | 97,282 | 95,296 | |||||
| Goodwill | 1,084,665 | 1,084,665 | |||||
| Other intangible assets, net | 68,150 | 76,990 | |||||
| Other assets | 811,743 | 659,721 | |||||
| Total Assets | $ | 33,765,539 | $ | 31,863,088 | |||
| Liabilities | |||||||
| Deposits: | |||||||
| Non-interest bearing | $ | 6,379,271 | $ | 6,175,495 | |||
| Interest bearing: | |||||||
| Savings, NOW and money market | 11,294,679 | 11,213,495 | |||||
| Time | 7,872,172 | 7,063,984 | |||||
| Total deposits | 25,546,122 | 24,452,974 | |||||
| Short-term borrowings | 1,825,417 | 2,118,914 | |||||
| Long-term borrowings | 2,250,633 | 1,654,268 | |||||
| Junior subordinated debentures issued to capital trusts | 55,631 | 55,370 | |||||
| Lease liabilities | 311,145 | 3,125 | |||||
| Accrued expenses and other liabilities | 218,516 | 227,983 | |||||
| Total Liabilities | 30,207,464 | 28,512,634 | |||||
| Shareholders’ Equity | |||||||
| Preferred stock, no par value; 50,000,000 authorized shares: | |||||||
| Series A (4,600,000 shares issued at September 30, 2019 and December 31, 2018) | 111,590 | 111,590 | |||||
| Series B (4,000,000 shares issued at September 30, 2019 and December 31, 2018) | 98,101 | 98,101 | |||||
| Common stock (no par value, authorized 450,000,000 shares; issued 332,101,525 shares at September 30, 2019 and 331,634,951 shares at December 31, 2018) | 116,650 | 116,240 | |||||
| Surplus | 2,807,266 | 2,796,499 | |||||
| Retained earnings | 454,020 | 299,642 | |||||
| Accumulated other comprehensive loss | (26,468 | ) | (69,431 | ) | |||
| Treasury stock, at cost (295,961 common shares at September 30, 2019 and 203,734 common shares at December 31, 2018) | (3,084 | ) | (2,187 | ) | |||
| Total Shareholders’ Equity | 3,558,075 | 3,350,454 | |||||
| Total Liabilities and Shareholders’ Equity | $ | 33,765,539 | $ | 31,863,088 | |||
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| Interest Income | |||||||||||||||||||
| Interest and fees on loans | $ | 298,384 | $ | 296,934 | $ | 265,870 | $ | 883,595 | $ | 751,146 | |||||||||
| Interest and dividends on investment securities: | |||||||||||||||||||
| Taxable | 21,801 | 22,489 | 21,362 | 67,166 | 64,907 | ||||||||||||||
| Tax-exempt | 4,219 | 4,356 | 5,023 | 13,379 | 16,383 | ||||||||||||||
| Dividends | 3,171 | 2,795 | 3,981 | 9,140 | 9,648 | ||||||||||||||
| Interest on federal funds sold and other short-term investments | 1,686 | 1,168 | 805 | 3,947 | 2,570 | ||||||||||||||
| Total interest income | 329,261 | 327,742 | 297,041 | 977,227 | 844,654 | ||||||||||||||
| Interest Expense | |||||||||||||||||||
| Interest on deposits: | |||||||||||||||||||
| Savings, NOW and money market | 35,944 | 38,020 | 28,775 | 110,247 | 75,848 | ||||||||||||||
| Time | 42,848 | 40,331 | 20,109 | 121,350 | 51,360 | ||||||||||||||
| Interest on short-term borrowings | 12,953 | 14,860 | 15,193 | 40,362 | 31,838 | ||||||||||||||
| Interest on long-term borrowings and junior subordinated debentures | 16,891 | 14,297 | 16,164 | 45,761 | 50,458 | ||||||||||||||
| Total interest expense | 108,636 | 107,508 | 80,241 | 317,720 | 209,504 | ||||||||||||||
| Net Interest Income | 220,625 | 220,234 | 216,800 | 659,507 | 635,150 | ||||||||||||||
| Provision for credit losses | 8,700 | 2,100 | 6,552 | 18,800 | 24,642 | ||||||||||||||
| Net Interest Income After Provision for Credit Losses | 211,925 | 218,134 | 210,248 | 640,707 | 610,508 | ||||||||||||||
| Non-Interest Income | |||||||||||||||||||
| Trust and investment services | 3,296 | 3,096 | 3,143 | 9,296 | 9,635 | ||||||||||||||
| Insurance commissions | 2,748 | 2,649 | 3,646 | 7,922 | 11,493 | ||||||||||||||
| Service charges on deposit accounts | 5,904 | 5,827 | 6,597 | 17,634 | 20,529 | ||||||||||||||
| (Losses) gains on securities transactions, net | (93 | ) | 11 | (79 | ) | (114 | ) | (880 | ) | ||||||||||
| Other-than-temporary impairment losses on securities | — | (2,928 | ) | — | (2,928 | ) | — | ||||||||||||
| Portion recognized in other comprehensive income (before taxes) | — | — | — | — | — | ||||||||||||||
| Net impairment losses on securities recognized in earnings | — | (2,928 | ) | — | (2,928 | ) | — | ||||||||||||
| Fees from loan servicing | 2,463 | 2,367 | 2,573 | 7,260 | 6,841 | ||||||||||||||
| Gains on sales of loans, net | 5,194 | 3,930 | 3,748 | 13,700 | 18,143 | ||||||||||||||
| (Losses) gains on sales of assets, net | (159 | ) | (564 | ) | (1,899 | ) | 76,997 | (2,121 | ) | ||||||||||
| Bank owned life insurance | 2,687 | 2,205 | 2,545 | 6,779 | 6,960 | ||||||||||||||
| Other | 19,110 | 11,010 | 8,764 | 39,880 | 28,758 | ||||||||||||||
| Total non-interest income | 41,150 | 27,603 | 29,038 | 176,426 | 99,358 | ||||||||||||||
| Non-Interest Expense | |||||||||||||||||||
| Salary and employee benefits expense | 77,271 | 76,183 | 80,778 | 236,559 | 253,014 | ||||||||||||||
| Net occupancy and equipment expense | 29,203 | 29,700 | 26,295 | 86,789 | 81,120 | ||||||||||||||
| FDIC insurance assessment | 5,098 | 4,931 | 7,421 | 16,150 | 20,963 | ||||||||||||||
| Amortization of other intangible assets | 4,694 | 4,170 | 4,697 | 13,175 | 13,607 | ||||||||||||||
| Professional and legal fees | 5,870 | 4,145 | 6,638 | 15,286 | 29,022 | ||||||||||||||
| Amortization of tax credit investments | 4,385 | 4,863 | 5,412 | 16,421 | 15,156 | ||||||||||||||
| Telecommunication expense | 2,698 | 2,351 | 3,327 | 7,317 | 9,936 | ||||||||||||||
| Other | 16,658 | 15,394 | 17,113 | 43,712 | 52,531 | ||||||||||||||
| Total non-interest expense | 145,877 | 141,737 | 151,681 | 435,409 | 475,349 | ||||||||||||||
| Income Before Income Taxes | 107,198 | 104,000 | 87,605 | 381,724 | 234,517 | ||||||||||||||
| Income tax expense | 25,307 | 27,532 | 18,046 | 110,035 | 50,191 | ||||||||||||||
| Net Income | 81,891 | 76,468 | 69,559 | 271,689 | 184,326 | ||||||||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 9,516 | 9,516 | ||||||||||||||
| Net Income Available to Common Shareholders | $ | 78,719 | $ | 73,296 | $ | 66,387 | $ | 262,173 | $ | 174,810 | |||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| Earnings Per Common Share: | |||||||||||||||||||
| Basic | $ | 0.24 | $ | 0.22 | $ | 0.20 | $ | 0.79 | $ | 0.53 | |||||||||
| Diluted | 0.24 | 0.22 | 0.20 | 0.79 | 0.53 | ||||||||||||||
| Cash Dividends Declared per Common Share | 0.11 | 0.11 | 0.11 | 0.33 | 0.33 | ||||||||||||||
| Weighted Average Number of Common Shares Outstanding: | |||||||||||||||||||
| Basic | 331,797,982 | 331,748,552 | 331,486,500 | 331,716,652 | 331,180,213 | ||||||||||||||
| Diluted | 333,405,196 | 332,959,802 | 333,000,242 | 333,039,436 | 332,694,080 | ||||||||||||||
| VALLEY NATIONAL BANCORP | ||||||||||||||||||||||||||||||||
| Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and | ||||||||||||||||||||||||||||||||
| Net Interest Income on a Tax Equivalent Basis | ||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||||||||||||||||
| Average | Avg. | Average | Avg. | Average | Avg. | |||||||||||||||||||||||||||
| ($ in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||||||||||
| Loans (1)(2) | $ | 26,136,745 | $ | 298,384 | 4.57 | % | $ | 25,552,415 | $ | 296,934 | 4.65 | % | $ | 23,659,190 | $ | 265,871 | 4.50 | % | ||||||||||||||
| Taxable investments (3) | 3,411,330 | 24,972 | 2.93 | % | 3,453,676 | 25,284 | 2.93 | % | 3,399,910 | 25,343 | 2.98 | % | ||||||||||||||||||||
| Tax-exempt investments (1)(3) | 632,709 | 5,341 | 3.38 | % | 658,727 | 5,514 | 3.35 | % | 730,711 | 6,358 | 3.48 | % | ||||||||||||||||||||
| Interest bearing deposits with banks | 313,785 | 1,686 | 2.15 | % | 212,566 | 1,168 | 2.20 | % | 181,901 | 805 | 1.77 | % | ||||||||||||||||||||
| Total interest earning assets | 30,494,569 | 330,383 | 4.33 | % | 29,877,384 | 328,900 | 4.40 | % | 27,971,712 | 298,377 | 4.27 | % | ||||||||||||||||||||
| Other assets | 2,924,568 | 2,829,760 | 2,521,463 | |||||||||||||||||||||||||||||
| Total assets | $ | 33,419,137 | $ | 32,707,144 | $ | 30,493,175 | ||||||||||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||||||||||
| Savings, NOW and money market deposits | $ | 11,065,959 | $ | 35,944 | 1.30 | % | $ | 11,293,885 | $ | 38,020 | 1.35 | % | $ | 11,032,866 | $ | 28,775 | 1.04 | % | ||||||||||||||
| Time deposits | 7,383,202 | 42,848 | 2.32 | % | 7,047,319 | 40,331 | 2.29 | % | 4,967,691 | 20,109 | 1.62 | % | ||||||||||||||||||||
| Short-term borrowings | 2,265,528 | 12,953 | 2.29 | % | 2,380,294 | 14,860 | 2.50 | % | 2,766,398 | 15,193 | 2.20 | % | ||||||||||||||||||||
| Long-term borrowings (4) | 2,143,432 | 16,891 | 3.15 | % | 1,607,046 | 14,297 | 3.56 | % | 1,991,294 | 16,164 | 3.25 | % | ||||||||||||||||||||
| Total interest bearing liabilities | 22,858,121 | 108,636 | 1.90 | % | 22,328,544 | 107,508 | 1.93 | % | 20,758,249 | 80,241 | 1.55 | % | ||||||||||||||||||||
| Non-interest bearing deposits | 6,387,188 | 6,358,034 | 6,222,646 | |||||||||||||||||||||||||||||
| Other liabilities | 637,300 | 539,047 | 204,590 | |||||||||||||||||||||||||||||
| Shareholders' equity | 3,536,528 | 3,481,519 | 3,307,690 | |||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 33,419,137 | $ | 32,707,144 | $ | 30,493,175 | ||||||||||||||||||||||||||
| Net interest income/interest rate spread (5) | $ | 221,747 | 2.43 | % | $ | 221,392 | 2.47 | % | $ | 218,136 | 2.72 | % | ||||||||||||||||||||
| Tax equivalent adjustment | (1,122 | ) | (1,158 | ) | (1,336 | ) | ||||||||||||||||||||||||||
| Net interest income, as reported | $ | 220,625 | $ | 220,234 | $ | 216,800 | ||||||||||||||||||||||||||
| Net interest margin (6) | 2.89 | % | 2.95 | % | 3.10 | % | ||||||||||||||||||||||||||
| Tax equivalent effect | 0.02 | % | 0.01 | % | 0.02 | % | ||||||||||||||||||||||||||
| Net interest margin on a fully tax equivalent basis (6) | 2.91 | % | 2.96 | % | 3.12 | % | ||||||||||||||||||||||||||
(1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
(2) Loans are stated net of unearned income and include non-accrual loans.
(3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
(4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
(5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
(6) Net interest income as a percentage of total average interest earning assets.